Well the Conservative leader David Cameron's been watching that with me.

Welcome, thank you for coming in Mr. Cameron.

Are you delighted with what's happened, or are you chagrined with what's happened?

DAVID CAMERON:
Well I'm disappointed because I wanted an election, I've called for one from the moment he walked into Downing Street, because I don't believe he has a mandate.

And I want to take our arguments to the British people. But watching that interview I think people sitting at home will think he's just not being straight with me. He's treating the British people like fools because...

ANDREW MARR:
In which way?

DAVID CAMERON:
Because everybody knows he wanted to have an election, and he's now saying I'm not having an election because I want to make my changes.

But everybody knows he's not having an election because he thinks there's a danger of losing it.

And I think those, just treating people like fools, and I think it will rebound on him very badly.

ANDREW MARR:
Well actually, deciding whether or not to have an election is something that all politicians go through. And there was a very strong sense at the beginning of your own party conference when you had been behind in the polls - you'd gone through a pretty rough summer, your own personal ratings were pretty low, that the Conservative party didn't want an election and was panicky about it, that the point of your party conference was to knock Gordon Brown off that course of action.

DAVID CAMERON:
The point of our party conference...

ANDREW MARR:
In which case it would have been successful and in which case you'd have been pleased.

DAVID CAMERON:
Well the point of our party conference was to get across to people the things that the Conservative Party stand for, and the things that we would do and the changes we'd make to our country in terms of giving people more opportunity, cutting stamp duty for first-time buyers, removing the threat of death duties for millions of families in our country, talking about how we strengthen families, make society more responsible.

Those were the things we wanted to talk about, we wanted to explain to people.

And we had that opportunity. And in opposition, actually it's an important point I think, your party conference is the one moment where you don't just have a little sound bite on the news, or a little answer here, you can really get across, you know, this is who I am, this is what I believe in, this is what I want to do. That's what the conference was all about.

And on the election issue I have been utterly consistent from the very day Gordon Brown moved into Downing Street. I said Tony Blair said he'd serve a full third term, he left after two years, so we should have an election. And I've said that whether we've been up in the polls or down in the polls, whether we've been winning council by elections or losing them.

ANDREW MARR:
You were saying that publicly, but privately your lieutenants were pretty rattled at the thought of an election at that stage?

DAVID CAMERON:
Well, we've said all along...

ANDREW MARR:
Because you were way behind in the polls, that's how politicians think, there's nothing dishonourable in it.

DAVID CAMERON:
No, but the point I've always made, if you look at when actually people go and vote, look at the two local elections we've had. You know, when the Conservative Party has been putting across our message and explaining what we believe in, in those local elections we've done extremely well.

And I'm confident that if we have the opportunity, which an election gives you, to really set out what you believe in, the things you want to change, and say to people, we don't have to put up with another five years of Labour failure. Things can be different.

When you have that opportunity I believe people will respond. It's a risk certainly, but, you might not be right, but I really believe people want change and I think we're setting out the changes they want to see.

ANDREW MARR:
Looking at the polling, it seems that it was the inheritance tax issue above all that started to shift opinion in a big way.

And I'd like to ask you about that. Because you said in your speech that George Osborne said that there were clearly enough non-domiciled people, non-doms in a phrase, out there to pay for this.

And the figure used was it had been 112,000 but it was a great deal more than that. Now, there is no evidence that it's a great deal more than that now at all?

DAVID CAMERON:
Well that's not true. We've had a succession of independent experts, tax lawyers and senior tax firms, and others, coming out and estimating the figure is probably above 200,000.

ANDREW MARR:
Because all I can find is Accountancy Age magazine mentioning it, and they were using their information on the basis of a single article by an Observer journalist, which is hardly the way to build a tax policy.

DAVID CAMERON:
No, there have also been senior tax partners at tax and accountancy firms who've come out and said that. And remember, our figures are based on 150,000 not 200,000. So we think our figures are conservative with a small "c", utterly realisable.

ANDREW MARR:
All right. Some of those people are quite clearly very, very rich, and £25,000 is what falls out of their trouser pockets in the morning. But a lot of them are not in that position, and you don't know, nobody knows, how many of them are actually relatively poor people who would find that a huge disincentive and would leave the country.

So all I'm saying is that it is an unknowable factor that you've put in on the one side of the equation, and on the other side it's absolutely hard numbers on the costs of raising the inheritance tax threshold to £1 million.

DAVID CAMERON:
Well the point is the strength of the policy is by saying there'll be a £25,000 charge. Non-domicile taxpayers who don't want to pay that charge have the option of bringing their offshore income onshore and paying tax in the normal way. So actually it's a very sensible policy because non-domicile tax residents for many years have had this uncertainty hanging over them - will the government suddenly tax my worldwide income?

And we're saying we do not want to go through your offshore bank accounts or all those things, but you have to pay this £25,000 charge, or bring your money onshore. So that is how we are absolutely we can raise the revenue that's necessary for the cut in inheritance tax to take the threshold up to £1 million. So, you know, people who've worked hard and saved hard and want to pass their home to their children rather than to the taxman, won't have to pay death duties.

ANDREW MARR:
But it's still, in terms of hard numbers, a miasma, it's a cloud, you don't know what's inside that cloud in hard numbers. And yet in traditional Tory terms, having spent two years not talking about tax cuts there's a very clear popular tax cut at the other side of it.

DAVID CAMERON:
But what is clear about our tax plans is that every tax reduction we've suggested, we actually set out very clearly how we'd pay for it. We're not making, I've always said it's wrong to make unfunded up-front tax cuts. That is not what we're doing, the changes we're made come with tax increases in other parts of the system, such as on non-domicile tax residents.

So it's very responsible, very clear, and people can know that we have said we will stick to the Labour spending plans of two per cent growth in the next three years. That I think gives people reassurance that these tax reductions will not be paid for by cutting spending in important services.

ANDREW MARR:
But if it turns out that the non-dom numbers aren't right, and nobody knows at this stage, will you therefore have to look for somewhere else to raise taxes in order to pay for the now very, very hard clear stamp duty promises, and the inheritance tax promises?

DAVID CAMERON:
Well we believe they are right. We've spent a lot of time working on this, we've worked with a number of independent experts on it. And I think what happened is the Treasury were caught completely on the hop, they then rushed out some figures to try and undermine our figures and then we got from the Permanent Secretary at the Treasury an explanation that he'd actually warned ministers to exercise those figures with extreme caution, but I didn't see any extreme caution from Alastair Darling or in that interview from Gordon Brown.

ANDREW MARR:
Gordon Brown did say in that interview that he was constantly looking at inheritance taxes, always under review. That's presumably something you welcome?

DAVID CAMERON:
Yes, I hope that they take on these plans. And actually take away the threat. I was in Abingdon yesterday chatting to people in a nice street but, you know, not grand houses, detached homes, chatting to people who were saying to me, you know, we never dreamed that we would be paying death duties and inheritance tax. We are people who work hard, have saved hard, put our money into our home, we want to pass it on to our children.

And they're very relieved that they're taking that threat away, and the government should do the same, but frankly, they've had ten years, and that is the whole point, I think, about the Prime Minister's interview. Suddenly now he says I'm going to provide changes. He's had ten years in which he's been in control of the government, in control of the domestic agenda, and things have got worse.

ANDREW MARR:
You've talked a lot about Gordon Brown and spin. There's one story I have to ask you about in today's paper, you mentioned working in a school and a boy who had come in and was late for an exam and said he'd got a hangover. The school is pretty outraged, and say that never happened?

DAVID CAMERON:
Well it did happen. I was standing in a corridor outside the examination room, I spoke to this boy, I spoke to someone who had taught at the school afterwards, and what I said to the conference is absolutely as it happened.

ANDREW MARR:
Let me ask you about something else which is, in the context of the last extraordinary couple of weeks. Do you feel it's right that the Prime Minister of the country has absolute and sole authority as to when the General Election happens, or do you think we should start to think about fixed term elections?

DAVID CAMERON:
I have written about constitutional reform in the past and said that fixed term parliaments are something we should look at. But I think there are disadvantages in a parliamentary system because there will be times when an election is appropriate.

And actually I think, as I've said to you, that when you have a Prime Minister who says I'm going to serve a full third term and then doesn't, I think it is appropriate to hold an election because people have voted for one thing and now got something completely different. So I think there are real drawbacks with a fixed term parliament in a parliamentary system. But we have Ken Clarke with the democracy taskforce, we can look at it, and we'll go on and we'll put our conclusions into a manifesto.

ANDREW MARR:
You may have two years now before there's an election. Nonetheless, have you sort of fired off all your big shells and they're kind of lying in craters halfway through no mans land, or have you got some other ideas to come?

DAVID CAMERON:
No, we have plenty of ideas to come and actually this conference we did not announce any more policies than we otherwise would have done. I'd always planned that as the policy review came to an end in July and August we would kill off the ideas we didn't like, bring forward the ideas we did like, and use our conference to try and set out as clearly as we could what modern Conservatism is.

And I think the reason our conference went well was actually not just inheritance tax, or not my speech or anyone else's speech.

It was people were hearing from the Conservative party a proper argument that, you know, here are the new challenges in this world. It's a more insecure world, it's a world of great freedom, but it's also a world of unease for people frankly. And the Conservative party were saying here are the things that we will change, here are things that we would improve, giving people opportunity, strengthening families, making the country stronger.

A proper argument about what's necessary in modern Britain. A big contrast to the Prime Minister's speech in Bournemouth which was a sort of long shopping list with no idea how these things were going to be brought about.

ANDREW MARR:
It wasn't simply that you've moved back to the right, traditional Tory messages and traditional Tory, sort of, that's what we like?

DAVID CAMERON:
No, not at all, if you, you know, see my speech, you can see the very strong commitment to the environment and yes, green taxes as a share of taxes do need to go up. That's not necessarily popular, but I think it's right.

ANDREW MARR:
All right. David Cameron, thank you very much indeed.

INTERVIEW ENDS

NB: This transcript was typed from a recording and not copied from an original script.

Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy

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